Debenhams expected to post big dent in half-year profits

Analyst consensus expects Debenhams to report a large decrease in its profits when it publishes its half-year results next week.

Figures estimate interim pre-tax profits to fall within a range of £42m-£47m and almost 50% decrease from £87.7m from the same period last year.

Like-for-like sales are also expected to have fallen by 2.5% with poor festive trading and store closures during its ‘Spring Spectacular’ in March due to bad weather having a severe impact.

George Salmon, an equity analyst from Hargreaves Lansdown, said: “Debenhams online operation is growing, but the majority of the business is generated in its large high street department stores. Long term lease agreements on these stores mean its estate is far from flexible. Being lumbered with large high street stores isn’t really a position you’d want to be in with online taking share at a rapid pace.

“These challenges, plus an ugly profit warning after a disappointing Christmas period, have put a few question marks over the dividend and ensured the group is one of the lowest rated retailers we cover.”

The news follows a profit warning from the department store giant in January which saw its shares plunge by 20% as well as an attempt to reduce costs in February by making 320 of its staff redundant.